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(Bloomberg) — Japanese Prime Minister Sanae Takaichi ordered a close review of the entire supply chain for oil-related products as the country scrambles to cope with the fallout from the war in Iran.
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Takaichi assigned the task to Trade Minister Ryosei Akazawa on Tuesday morning at a meeting with relevant ministers. Foreign Minister Toshimitsu Motegi and Defense Minister Shinjiro Koizumi also attended the gathering in Tokyo.
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“I’m asking the relevant ministers to continue to respond with a sense of urgency,” Takaichi said after the meeting. “The ministers will work to bring the situation under control early and to promote peace and stability in the Middle East, including energy security.”
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Akazawa is tasked with examining the entire supply chain for petroleum-related products, including non-energy items such as naphtha, a vital component in plastic manufacturing.
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READ: Shortage of Naphtha Threatens Supply Chain Chaos in Japan (1)
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The ripple effects from the war that began on Feb. 28 continue to hit Japan on multiple fronts. While Takaichi avoided a showdown with US President Donald Trump when they met in Washington last week, Japan remains under pressure from the Trump administration to help secure the Strait of Hormuz. Most of Japan’s oil imports originate in the Middle East and pass through the strait.
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“Maintaining peace and stability in the Middle East, including ensuring the safety of navigation in the Strait of Hormuz, is of paramount importance to the international community, including Japan,” Takaichi said. “It is essential for a stable supply of energy.”
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The Omega Trader, an oil supertanker managed by Japan’s Mitsui OSK Lines Ltd, has passed through the Strait of Hormuz, according to tanker-tracking data compiled by Bloomberg. Mitsui OSK Lines denied that the vessel made the passage.
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With the vital waterway effectively shut down, the first Japanese oil tanker using an alternative route in the region is set to arrive in Japan on March 28, Akazawa said Tuesday. He declined to identify the ship.
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Japan began releasing oil from private-sector stockpiles on March 16 and is set to start drawing from national reserves on March 26, according to Akazawa. The government has also pledged subsidies to keep gasoline prices around ¥170 per liter, allocating ¥800 billion ($5 billion) from fiscal 2025 budget reserves.
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Higher oil prices following the outbreak of war are likely to add inflationary pressure, complicating the Bank of Japan’s efforts to normalize policy through gradual interest rate hikes. While the a key inflation gauge slowed to 1.6% in February, falling below the central bank’s 2% target for the first time in nearly four years, economists expect the pace of price gains to pick up again from March.
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The yen’s persistent weakness is also set to make oil imports more expensive for Japan. After Finance Ministry officials cited speculative moves in the oil market that looked to be affecting currencies, authorities are said to have made inquiries with market participants on possible intervention in the crude oil futures market.
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(Updates with more details)
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